Another Share of Freehold Question

pretamang

First time poster here, but long time reader. After reading hours of threads on share of freehold I thought I was prepared and informed enough to purchase (FTB) a share of freehold flat, but now find myself in a confusing situation.

I am close to exchanging on a share of freehold flat one of three in the building which is owned by a limited company. When i received the contract to sign there was a TR1 form for the transfer of the lease, but nothing to suggest a share of the freehold was being transferred. I asked my lawyer to explain, and they said they aren't able to confirm yet whether the seller took the option of the freehold. I've got the company accounts/annual returns and it doesn't mention the seller as a director or shareholder.

Does this mean that they don't actually own a share in the freehold in the first place? Has anyone else experienced problems like this before?

Fire_Fox

Welcome! Sounds plausible, but really the only person who can answer your question is the vendor either via their estate agent or solicitor.

sailerboy

Do NOT check this via the estate agent. This is a legal matter and should be done via legal channels. Your solicitor should confirm what you are buying: lease only or lease + share of freehold.

You could use the EA to inform the seller that if the freehold is NOT included you will either pull out or reduce your purchase price.

pretamang

Thanks for the help. I'm expecting to hear from my solicitor tomorrow

The EA called me back today to confirm from the seller that the flat is indeed leasehold plus a share of the freehold, but they are not shareholders/directors of the limited company and that is done differently. Having looked it up on the land registry and co house the two other flats are shareholders and directors, so I'm not sure what this 'different' arrangement involves. If I'm not getting a share in the company which owns the flat how else could the share of freehold be transferred?

Richard_Webster

The EA called me back today to confirm from the seller that the flat is indeed leasehold plus a share of the freehold, but they are not shareholders/directors of the limited company and that is done differently. Having looked it up on the land registry and co house the two other flats are shareholders and directors, so I'm not sure what this 'different' arrangement involves. If I'm not getting a share in the company which owns the flat how else could the share of freehold be transferred?

If the company is limited by shares then you should get a share, if limited by guarantee there will be no shareholders and you apply to be a member a sign a form saying that if the company is wound up you guarantee to pay a sum of money (usually £1). Seller's solicitors need to get the other two members of the company to confirm that you will become a member either by the issue/transfer of a share to you or by you being accepted as a member, having signed a guarantee form.

propertyman

pretamang wrote: »

The EA called me back today to confirm from the seller that the flat is indeed leasehold plus a share of the freehold, but they are not shareholders/directors of the limited company and that is done differently.

:rotfl: That's hysterical. " I am making it up as I going along - please for goodness sake don't ask me how".

I think your first post is right either
a they didn't or
b the paper work was not done
for your vendor to participate in the freehold purchase.

:money:DO NOT PROCEED as you say until your solicitor clarifies this , so that you understand whehter it has any implications for you about the length of your lease, the cost of extending it, or buying into the freehold company.

What Richard says is technically correct, however the risk is that they will ask for an additional payment to join the company (if the vendor is not a member).

pretamang

so, it's confirmed that the seller does not own any of the freehold and is in fact selling the lease which has run down to 80 years and needs renewing.

I'm very close to walking away, but we're exploring whether the seller can get their name on the freehold now (probably unlikely), or go ahead and buy the lease provided it's extended first.

Is it good idea to buy a leasehold when your neighbor owns the freehold? There is no maintenance as repairs are paid for ad-hoc equally by all leaseholders, which is not ideal. is it possible to acquire a share of the freehold in future after purchasing the lease?

propertyman

Either you or the vendor can negotiate an extended lease or thepurchase into the freehold, however as the lease extension attracts a considerable premium due to the freeholders, it is likely that the price of either will be significant.

Your vendor does have a statutory righto to apply for a lease extnesion and can assign that you, again at a price.

Which route you take is up to you and you need an independent valuation by a local chartered surveyor to guide you.

If repairs are arranged ad hoc this is not strict in accordance with the lease or a variety of statutory guidance and requirements. While in practice this works for many there are risks if the others feel disinclined to fix the roof properly as they cannot afford it or " I will be in a home in 5 years" and you may have more rights to force them to fix it as a leaseholder than if you are a freeholder as in simple terms it's hard to sue yourself.

Similarly as a freeholder if you failed to carry out a fire risk assessment or place adequate buildings insurance you could be left homeless and uninsured, or failing to have a risk assessment for the common stairs and the cleaner has a nasty fall, on the wrong side of a criminal penalty. If you think the others might resist taking such steps being a leaseholder might be better.

Discuss with your solicitor and if they look blankly at you, fire them.

Fire_Fox

IMO tell the estate agent the long lease needs to be extended by 90 years for a peppercorn rent at the same purchase price or you walk away. You have no legal right to negotiate extending the lease with the freeholder unless they wish to, you are not contracted to them. They won't sell a share of the freehold to you as an outsider and you'd be mad to buy without it being done at the same time as the purchase of the long lease, again I'd get the vendor to negotiate if you want this.

What is in the long lease about how repairs and maintenance are organised? If works are more that £250 per flat there needs to be a consultation or everyone needs to agree, has this been adhered to in the past? Loads of information on lease extension, being a freeholder and maintenance here
http://www.lease-advice.org/publications/